11AM Hour: Coatue's Philippe Laffont, Former NEC Director Gary Cohn & Inflation at a 3-Year High 6/10/26

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Carl Quintanilla (0:55)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Mike Santoli here at Post9 of the New York Stock Exchange. Sara Eisen will be here in a moment. Tech volatility this morning trumps Iran threat inflation hitting a three year high. We're going to break down all the macro risks for investors with former NEC director Gary Cohn.

Mike Santoli (1:12)

Plus a rare interview with Coatue founder and portfolio manager Philippe Laffont. Find out why he thinks index funds have corrupted and warped the public markets and why he calls BlackRock quote Darth Vader.

Carl Quintanilla (1:24)

And another rare interview, Sara sitting down with Baupost CEO Seth Klarman this morning. We'll hear why he thinks the market is showing aspects of a bubble. That said today, again pronounced volatility, 1%, 2% swings in various sectors. S&P once again back to 73.30, which has turned out to be kind of an interesting level last few days.

Mike Santoli (1:44)

73.3 was the May low. So it was this kind of potential tripwire level. We've been watching it. Very unsettled action under the services. Much as breadth has been positive, we'll try to broaden. This is sometimes, as I say, what a broadening market looks and feels like. We're going to start this morning with the CPI report that we got a couple hours ago. Steve Leesman joins us now with that. Hi, Steve.

Steve Leisman (2:05)

Hey, Mike. Yeah, the hot inflation report this morning meeting heated rhetoric from President Trump about the Iran conflict that suggested is no closer to resolution. Headline coming in at 0.5%. That's a tick down from where it was the prior month, but still fairly elevated, leading to a 4.2% year on year up from 3.8%. That's the worst in September 2023 Core rate a little bit better, a little better than expected up to 0.2%, but still the core is elevated on the year over year basis at 2.9%.

President Trump, meanwhile, he said this morning, quote, they Iran, they've taken too long to negotiate a deal that would have been great for them. Now they will have to pay the price. Why does that matter? Well, oil prices pushed higher and for economists, a longer conflict means higher prices for longer to incorporate into their forecast. Gregory Deco is saying, the longer the Middle East conflict persists, the broader and more persistent inflationary pressures are likely to become. For now, there appears to be little pass through of higher energy costs into core inflation outside of airfare. Well, that may change. Take a look here, energy up 23.5% year over year, apparel up 4.8%, food pretty elevated at 3.1%, and core services, that's something the Fed's going to watch, the index rent up 3.7%. Diane Squawk at KPMG is saying, we need to see a much more dramatic cooling of service sector inflation along with a drop in goods prices to get inflation back to anything resembling price stability. The question for the Fed and its new chair, Kevin Warsh, what do they think about the persistence of inflation? Does it go away once and if oil prices recede? Or does the Fed need to take action? Increasingly, guys, as you see from the futures markets, markets are betting it's going to take action to bring down inflation. Carl?

Carl Quintanilla (3:46)

Yeah. Steve Item on the tape today. Looking at some traders making bets on a hike as early as September, the tape argues.

Steve Leisman (3:54)

Hold on. Let me take a look at that.

I mean, there's a 31% probability of a hike. You are correct. That kind of snuck up on me there. We have 63% for December. And the other thing I'm watching, Carl, is this bid down the road a year from now, a 44% probability of a second hike in April. So all of that is something that the market is saying, you know what, inflation doesn't go away just if oil recedes. It's going to take more. There's also knock on effects that maybe we should talk about, which is what's going to happen to food prices next year because of the elevated chemical and fertilizer and other costs that are out there.